(New York) The dollar retreated late in Monday’s trading against the euro, with market participants cautious ahead of US Federal Reserve (Fed) chief Jerome Powell’s congressional hearings and a major report on employment in the United States.
Around 3:20 p.m. (Eastern time), the euro gained 0.36% against the greenback, at 1.0673 dollars.
“We are entering a particularly busy period for the markets between Mr. Powell’s public appearances and Friday’s report,” said Mazen Issa of TD Securities.
January’s employment figures came as a surprise when it showed the US economy had created 517,000 jobs.
“Everyone wonders if this figure was an exception or if it should be considered the norm,” recalls the specialist.
If the job market remains tight in the United States, this should encourage the Fed to continue to raise interest rates in an attempt to combat inflation, which is still very high in the country.
Such an outlook supported the dollar in February, which however lost some of its momentum since the beginning of the month.
After several sometimes somewhat contradictory American indicators, “there is not much conviction on the foreign exchange market at present, which is struggling to decide on a clear trend”, observes Mazen Issa.
This is why investors will be attentive to the words of Mr. Powell, who will speak on Tuesday and Wednesday before the Senate and the House of Representatives.
“Market participants will be watching Mr. Powell’s comments to gauge whether he is more open to raising rates more than twice again this year in response to strong economic and inflation data,” Lee said. Hardman, analyst at MUFG.
“The Fed’s terminal rate expectations”, that is to say their highest level of this cycle, “have increased by 70 basis points since the January employment report”, notes this specialist.
“The other big events of the week are the meetings of the central bank of Australia” (RBA) on Tuesday, “of the central bank of Canada on Wednesday and of the Bank of Japan on Thursday”, lists Jim Reid, analyst at Deutsche Bank.
“The RBA governor may ease his stance, which is currently calling for ‘further rate hikes’ tomorrow (Tuesday) after the meeting due to recent disappointing Australian economic data,” according to CBA’s Kristina Clifton, who expects an increase of 25 basis points to 3.60%.
The Australian dollar lost 0.68% to 1.4873 Australian dollars for one US dollar.